SBM offshore

SBM Offshore was awarded two FPSO contracts by Petrobras in northeastern Brazil, worth a combined $7.8 billion. SBM will operate both units for an initial period of 6.5 years under separate O&M contracts, with ownership retained by Petrobras-led consortia.

The specs are standard for Brazilian deepwater: 120,000 barrels of oil per day each, 2,500 metres water depth, with deliveries expected in 2030 and 2031. Worth noting: both FPSOs will be connected to an onshore gas export pipeline, monetizing associated gas and reducing flaring.

For SBM, this is high-quality backlog: Petrobras is the most consistent client in the FPSO sector, the Brazilian basin is well-known territory for the teams, and the Fast4Ward program reduces execution risk through hull standardization. SBM's directional backlog stood at $35.1 billion at end-2024; these $7.8 billion represent an addition of roughly 22%, which is significant by any measure.

We expect a positive market reaction and remain positive on SBM as a buy-and-hold name.

Expert Opinion:
This contract further reinforces the backlog of SBM Offshore. We still like the company which benefits from strong partnership with key companies of the like of Petrobras. Despite the recent sharp rise in price, we still view SBM Offshore as an attractive play at this stage with 25% upside remaining. Add rating reiterated. 

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